Three Ways Location Intelligence Helps Fight Financial Crime

Payment fraud. Account takeovers. Money laundering. Clever financial criminals have many ways to profit from their victims.  

And they’re increasingly determined to steal your money. TransUnion reported a 149 percent global increase in the rate of suspected digital fraud attempts against financial services firms in the first four months of 2021. 

Before they commit any type of financial crime, a bad actor will hide their location. They often do this by manipulating their IP address with VPNs or proxies, so a financial institution (FI) thinks the fraudster is logging in from Boston instead of Bosnia. 

Fraud-detection pros know they can’t rely solely on IP addresses to verify location, and are looking for a better way. “There has been growing interest from Gartner clients in banking to discuss the use of location intelligence as a signal in their fraud detection processes,” Gartner analysts note in the Market Guide for Online Fraud Detection.*

What is Location Intelligence – and How Does it Work? 

Location intelligence is GeoComply’s approach to collecting, verifying and analyzing location data that brings a new set of insights for fraud and risk management. Location intelligence includes these three key steps: 

• Gather multi-source location data – GeoComply collects geolocation signals from multiple sources including GPS, WiFi, GSM, browser/HTML5 and IP addresses.
• Verify location accuracy – Our rules engine runs 350 checks on every transaction to analyze suspicious activities, including VPN and proxy detection.
• Analyze location behavior – GeoComply combines real-time and historical data to detect and flag patterns of location fraud. Our models are constantly updated using both machine learning and human intelligence. 

Geolocation data collected from multiple sources and verified for authenticity increases the confidence that a user’s location is accurate.

How Location Intelligence Prevents Financial Fraud 

Location intelligence helps FIs mitigate their fraud risks by detecting and stopping bad actors who spoof their location. By enriching their existing fraud risk engines with location intelligence, financial institutions can: 

• Detect suspicious behavior at onboarding – Location intelligence helps establish a customer’s true digital identity by collecting geolocation data during account creation and KYC/onboarding. This data enhances an FI’s ability to evaluate risk, understand user behavior and detect potentially suspicious activity.

• Mitigate transaction fraud and slash false positives – Verified location data increases the certainty that a customer is who they say they are, which improves pass rates and cuts back on false positives. Greater confidence in a user’s identity also reduces false negatives, closing the security holes bad actors use to access an FI’s platform and commit fraud.

• Prevent account takeovers and account update fraud – FIs can monitor account updates and user behavior by adding geolocation checks to continuous authentication. Location checking can be employed at login, when updating account and banking details or at other sensitive times. 

Geolocation authentication throughout an online session, combined with the power of a real-time and historical risk engine, helps detect patterns of behavior that may indicate fraud. For example, a user’s latitude/longitude or IP-based location coordinates jumping a large distance in a short period of time can indicate account sharing or account takeovers. 

Location intelligence helps financial institutions drive down fraud costs and protect their customers with the tools they already have. 

Watch the on-demand webinar to learn more: Stop Online Financial Crime with Advanced Location Data.

________________________

*Gartner, Market Guide for Online Fraud Detection, Akif Khan, Jonathan Care,12^th July 2021. 

Gartner does not endorse any vendor, product or service depicted in its research publications and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s Research & Advisory organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.